For many entrepreneurs, developing a business plan is the first step in the process of deciding whether to actually start a business. Determining if an idea fails on paper can help a prospective founder avoid wasting time and money on a business with no realistic hope of success.
What may have seemed like a good idea for a business can, after some thought and analysis, prove not viable because of heavy competition, insufficient funding, or a nonexistent market. (Sometimes even the best ideas are simply ahead of their time.)
A business plan should…
Serve as a guide to the business’s operations for the first months and sometimes years, creating a blueprint for company leaders to follow.
Communicate the company’s purpose and vision, describe management responsibilities, detail personnel requirements, provide an overview of marketing plans, and evaluate current and future competition in the marketplace.
Create the foundation of a financing proposal for investors and lenders to use to evaluate the company.
Most of all, a good business plan should be convincing. It should provide concrete, factual evidence showing your idea for a business is in fact sound and reasonable and has every chance of success.
After you objectively evaluate your capital needs, products or services, competition, marketing plans, and potential to make a profit, you’ll have a much better grasp on your chances for success.